KUALA LUMPUR: SapuraKencana Petroleum Bhd, which took a RM2bil hit on its assets last year to account for the sharp drop in oil prices, expects the operating environment in 2016 to remain difficult due to the wild swings in the crude oil market.
Despite the challenges, the company had so far secured about RM6bil in new contract wins, bringing its current orderbook to RM21bil in total.
“The outlook on the company in the long-term is positive,” said president and chief executive officer Tan Sri Shahril Shamsuddin.
Shares in SapuraKencana have been on a downward trend since March 18, 2016 shedding up to 14% leading up to its fourth quarterly results for the period ended Jan 31, 2016, in which it underwent a kitchen-sinking exercise.
Yesterday, shares in the company gained 4 sen to RM1.87 with 12.2 million shares done.
During the fourth quarter, the group impaired about RM1.4bil in the value of its assets, bringing the full-year total to about RM2bil, to reflect oil price weakness, resulting in it posting one of its worst quarterly performances so far.
The impairments were made on its property, plant and equipment and O&G properties.
Although there have been concerns that SapuraKencana is likely to recognise more of these provisions in the coming quarters due to the volatility in the O&G sector, some experts said future impairments are not likely to be as significant than what was reported in the fourth quarter.
Analysts said potential future impairments are likely due to lower asset utilisation rather than oil price weakness.
For the fourth quarter, SapuraKencana posted a net loss of RM1.28bil compared with net profit of RM129.1mil a year ago, due to the provisions on impairment of its assets.
Revenue stood at RM2.23bil against RM2.39bil in the same period last year.
It also wrote off deposit on proposed acquisition of O&G assets of RM172.5mil. Several of SapuraKencana’s assets had to be marked to current market prices due to weak oil prices.
The company saw full year net loss of RM791.5mil against RM1.4bil in net profit for 2015. This was on the back of RM10.18bil in revenue.